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2. The appellant claims to be a contract manufacturing unit engaged in manufacturing biscuits for its principal Parle Biscuits.

.     the appellant

                                                           E/53283/2018

3. The appellant claims that it was authorised by Parle Biscuits to manufacture, on its behalf, "biscuits" and to comply on its behalf all the procedural formalities contemplated under the Central Excise Act, 19442 and the Rules framed thereunder in respect of the goods manufactured on behalf of Parle Biscuits and also to furnish information relating to the price at which Parle Biscuits would sell the said biscuits in order to enable the determination of the value of the said goods under section 4A of the Excise Act.

4. The inputs used for manufacture of the biscuits are supplied by Parle Biscuits which pays for the inputs but the appellant takes credit of the same and utilises the credit for payment of duty on the biscuits cleared on account of Parle Biscuits. The appellant also claims that it availed and utilised input services used in relation to the manufacture of biscuits for Parle Biscuits in accordance with the provision of the CENVAT Credit Rules 20043.

5. The final product is cleared on payment of excise duty by the appellant on the maximum retail price declared by Parle that is printed on the packages of the biscuits, as is provided under rule 10A of the Central Excise (Valuation) Rules 20004. The excise duty paid by the appellant is over and above the amount of CENVAT credit reimbursed by Parle Biscuits.

6. The office of Parle Biscuits at Bahadurgarh is registered as an "input service distributor" under rule 2(m) of the CENVAT Rules. It has also been stated that various inputs services were procured by Parle Biscuits on payment of service tax. However, as biscuits were . Excise Act . CENVAT Rules . Valuation Rules E/53283/2018 manufactured not only in the factories of Parle Biscuits, but also in the factories of other contract manufacturers, it was thought, as a business strategy, that advertisement, market research, sales promotion and marketing should be centralised and handled by the office of Parle Biscuits at Bahadurgarh. Such credit on input services attributable to the final product was distributed by Parle Biscuits on a pro-rata basis proportionate to the turnover of each unit between its own manufacturing plants and its contract manufacturing units, including Krishna Food, under rule 7(d) of the CENVAT Rules.

8. The issue involved in this appeal is whether Parle Biscuits was justified in distributing credits on input services attributable to the final product on a pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of Parle Biscuits and its contract manufacturing units, including the appellant, under rule 7(d) of the CENVAT Rules.

9. A Division Bench of the Tribunal while hearing Excise Appeal No. 52692 of 2019, Excise Appeal No. 52693 of 2019 and Excise E/53283/2018 Appeal No. 52694 of 2019 expressed reservations about the proposition of law laid down by the Division Bench in Sunbell Alloys Co. of India Ltd. vs. Commissioner of Central Excise & Customs, Belapur5 and also noticed that a Division Bench of the Tribunal in Colgate Palmolive (I) Ltd. vs. Commissioner of Central Excise, Mumbai-I 6 had taken a contrary view. The Division Bench, therefore, referred the following two questions for consideration by a Larger Bench of the Tribunal: